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Common questions about Form 4797 in ProConnect Tax

by ProConnect Tax Online Updated 7 months ago

This article will help you with frequently asked questions about Form 4797.

Why isn't my sale flowing to Form 4797?

Check your Informational diagnostics and review any that refer to a disposition or depreciable asset. These will alert you if a disposition is being ignored or not producing a 4797 for common reasons, like a sale date that falls after the end of the tax year.

For individual and corporate returns

If the asset was entered on the depreciation screen:

  1. Go to Input Return  Deductions  Depreciation
  2. Select the Auto & Additional Info. tab.
  3. Make sure there is not a 1 in 1 = delete this year, 2 = delete next year.  If a 1 is entered, the program will ignore the asset.
  4. Select the Disposition tab.
  5. Verify the date entered in Date sold, disposed, or retired.
    • Make sure the date falls within the year for which you're preparing this return.
  6. Verify you have an entry in Sales price.

If the asset was entered on the dispositions screen:

  1. Go to Input Return Income  Dispositions.
  2. Select the  Details button for the applicable asset.
  3. Verify all of the required fields have been completed:
    • Description of property
    • Date acquired
    • Date sold
    • Sales price
    • Cost or other basis
    • Depreciation allowed
  4. Select the Sale of Asset 4797 tab.
  5. Scroll to the Form 4797 section.
  6. Verify an amount is entered in Depreciation allowed (-1=none, triggers 4797).

For partnership and S corporate returns

If there is prior section 179 on the asset(s), the information will print as a separately stated item on the Schedule K/K-1 in the other information section and will not flow to Form 4797.

How do I enter a K-1 disposition for line 10?

  1. Go to Input Return Income  Passthrough K-1's.
  2. Select the K-1 activity. 
  3. Scroll down to Line 11 - Other Income for a 1065 K-1, or Line 10 - Other Income for an S corp K-1.
  4. Enter the amount in Ordinary gain (loss) to be reported on 4797, line 10 or Passive ordinary gain (loss) to be reported on 4797, line 10.

Where do I enter recapture when business use drops under 50% for Part IV?

  1. Go to Input Return Income  Dispositions
  2. Select Carryovers/Misc Info in the top-right. 
  3. Select the 4797 Carryovers tab.
  4. Locate the Recapture 50% or Less Business Use heading.
  5. Enter the amount you want to print on line 33(a) in Section 179 expense deduction.
  6. Enter the amount you want to print on line 34(a) in Depreciation allowable.

How do I report business bad debt?

  1. Go to Input Return Income  Dispositions. 
  2. Enter the applicable information regarding the sale (Description, date acquired, date sold, sales price, cost or basis)
  3. Select the Sale of Asset 4797 tab.
  4. Enter an amount of prior deprecation or -1 in the field labeled Deprecation Allowed (-1 = none, triggers 4797).
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